Hi!

These are my thoughts:

1. Purchase a copy of "Australian Property Investor" magazine from the newsagent and look at the rear pages to identify suburbs with a good balance of good capital growth, good rental yield, and low vacancy rate.

2. Get onto http://www.realestate.com.au and see what is for sale in that area.  Then look at what similar properties are asking for in rent (same website).  Once you've got an idea of what is there, visit some open for inspections. 

Not convinced you have to pay someone else to tell you where to buy property.  I reckon you can manage the above-mentioned steps

What is this Broadsword group offering to do for you, and how much are you expected to pay for it?

Remember to ask council about street setbacks (eg you often have to have your property about 5m back from the front of your property boundary), and height restrictions also (you might find that a doublestorey townhouse is not an option for a particular site). 

Why don't you simply ask who the tenant is?  Sounds like a serviced apartment or hotel mob for sure.  You will find plenty of literature on this site about such things.  Search for "serviced apartment" and you'll see everyone's opinion, which in summary is that they do not have the capital growth of regular properties, and to stay away as a result.

You should also be aware that often banks require the property to be of minimum size (I've got the figure of 50sqm, but do not quote me) before they'll finance on it.  Often studio apartments do not make the cut due to being too small for the bank's happiness.

Be careful, I'm certain I read somewhere that you can only claim expenses if the asset earned an income of some sort in the same financial year.  Look into it.  If you find this to be true, then if you have to, rent the place out for a week for a dollar.

What type of property is it?  eg flat/studio with one carpark on title?  nasty serviced apartment with no capital growth?

Keep a close eye on the council website.  Keep a close eye on googlemaps to see if there are any new squares marked on the map.  Most importantly, make a phonecall (or better still, go in) to the council and speak to someone from the planning department.  Make them your new best friend, and contact them often to get a heads up on future plans.

Good drivers for capital growth are:

Forthcoming infrastructure (eg new highways, train lines, train stations). New shopping centres (go Mister Westfield).  Pretty much anywhere that Bunnings set up shop. 

It is always good to be close to public transport (though not necessarily on the doorstep of it due to noise), and shopping, and schools.

The first thing you should do is call the local water authority and find out if there are any easements or sewer mains on the property.  If there are, ask them to explain what portion of the land you are not allowed to build on.

Then ring council planning department and ask them if they currently see any reason why subdivision would not be allowed.  Also ask if there is any reason why you couldn't build 2 or 3 townhouses.

Not convinced you can buy a property at auction  "subject to subdivision/building permission".  You could try that for a private sale, but the vendor would probably say no because it takes a while to get the permission.

Hi

Tax is done in a couple of different ways.  Go to the http://www.ato.gov.au and read up on capital works to understand how you claim on renovations and so on.

The easy answer to your question is:

Get your rental return (which is 260per week) and multiply by the number of weeks you received rent in the financial year (we'll say 28).  That gives you $7280 in rental return.

Now for your costs.  Let's say your council rates are $800 for the year.  You can only claim the portion of the year for which the property became AVAILABLE for rent.  That means from when it got rented, or when you started advertising it.  Again we'll call this 28 weeks.  So you've got $800 x 28/52 = $430.75.  You'd do the same with the water bill.  You'd do the same with insurance.  You can also deduct property management, gardener fees, that sort of thing, if you happen to be paying it.

So:

INCOME
Rental     $260 * 28 = $7280 

EXPENSES
Council Rates $800 * 28/52 = $430.75
Insurance $520 * 28/52 = $280
Water service charges $220 * 28/52 = $118.46
Gardener $10 * 28 = $280
Property Manager $0
TOTAL EXPENSES : $1109.21

INCOME MINUS EXPENSES = $7280 – $1109.21 = $6170.79

Then what you do is you work out your other income (eg day job).  Let's say you earn $62k gross per year. 

You do this:  $62,000 + $6170.79 = $68170.79.  So your total taxable income is now $68170.79, and you work out your tax as per normal.  http://www.ato.gov.au has calculators.

Note:  bank interest on a property loan can also be deductable provided that the reason you took out the loan was for investment.  Sounds like this is not the case for you – you took out the loan for your "home", not an investment property.  If it is going to remain a rental forever, might be worth refinancing so you can redeclare the loan as for investment purposes.

Just want to mention that I think this thread is awesome.  Very educational indeed, especially for those of us who are not tradies and not experienced in identifying issues such as described in the replies above.  Would love to see lots more practical "here are pics of my reno project, help me see what needs fixing" threads like it!